This article presents an overview of the 5 Best Blue Chip Stocks To Invest In According to Hedge Funds. For a detailed overview of such stocks, read our article, 12 Best Blue Chip Stocks To Invest In According to Hedge Funds.
5. Nvidia Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 180
Nvidia Corp (NASDAQ:NVDA) is perhaps one of the hottest blue chip stocks to buy now according to both institutional investors and retail investors. The stock has gained about 216% over the past one year but many analysts believe AI-driven growth catalysts can drive the stock even higher.
A total of 180 hedge funds tracked by Insider Monkey reported owning stakes in Nvidia Corp (NASDAQ:NVDA) as of the end of the September quarter. The biggest stake in Nvidia Corp (NASDAQ:NVDA) is owned by Rajiv Jain’s GQG Partners which owns a $6.1 billion stake in Nvidia Corp (NASDAQ:NVDA).
Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:
“Apple and NVIDIA Corporation (NASDAQ:NVDA) alone drove over 1,100 basis points of the Russell 1000 Growth Index’s 42% return, so not owning them was a meaningful headwind to our relative return in 2023. NVIDIA shares rocketed higher by well over 200% in 2023 although they slightly underperformed our Portfolio and the Russell 1000 Growth in the fourth quarter. Generative AI has been a huge boon for NVIDIA as the use of LLMs like ChatGPT and others requires tremendous processing power that, today, is mostly provided by NVIDIA’s GPUs. All large cloud service providers, AI factories, and many large consumer internet companies are laying the foundation for generative AI by deploying NVIDIA GPUs and other parallel processing chips to be able to do large scale generative AI either for internal use (i.e., Meta) or as a service for others (i.e., AI factories) or both (cloud service providers such as Amazon, Microsoft, and Google).
Given many of NVIDIA’s customers or its end customers are still very much in the experimentation phase with generative AI, it is unclear how sustainable the current demand for GPUs truly is. At the same time, it is known that NVIDIA has historically been highly cyclical. By the end of 2024, we believe NVIDIA will already account for roughly half the market for datacenter chips, servers, and networking equipment, which is unprecedented. Even though the valuation at 25x forward earnings doesn’t look very demanding at first glance, it assumes NVIDIA will own virtually the entire datacenter chip market in just the next few years and will sustain year-on-year growth despite being a cyclical business that is currently experiencing much higher new peaks.
We believe NVIDIA is a highly advantaged business, but we also believe the long-term growth outcomes are currently too variable, and the expectations built into the company’s $1.2 trillion valuation as of this writing assume the most optimistic of those scenarios.”
4. Alphabet Inc Class A (NASDAQ:GOOGL)
Number of Hedge Fund Investors: 221
Alphabet Inc Class A (NASDAQ:GOOGL) is one of the top favorite blue chip stocks of elite money managers. Alphabet Inc Class A (NASDAQ:GOOGL) plans to pour billionaires to up its AI game and actually implement the AI prowess it has to compete with Microsoft and other companies. Alphabet Inc Class A’s (NASDAQ:GOOGL) Cloud business along with YouTube and other innovative bets make it a relatively undervalued blue chip stock to buy and hold, according to many Wall Street analysts.
YouTube’s CEO recently revealed that YouTube TV, which costs about $73 a month, has over 8 million subscribers.
The FPA Crescent Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its fourth quarter 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) continued going from strength to strength during 2023 despite concerns that competition may infringe on the company’s dominant position in Search. Thus far, Alphabet has continued to hold its own, and we look forward to seeing how the company incorporates further AI developments across the Alphabet ecosystem. Lastly, we are hopeful that the impending arrival of a new CFO will bring a renewed focus on efficiency – an area where we believe Alphabet has ample room for improvement.”
3. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 234
Meta Platforms Inc (NASDAQ:META) ranks third in our list of the best blue chip stocks to invest in according to hedge funds. Meta Platforms Inc’s (NASDAQ:META) business is thriving. Meta Platforms Inc (NASDAQ:META) recently posted stronger-than-expected Q4 results which showed a revenue growth of 25% year over year. Meta Platforms Inc (NASDAQ:META) pleased investors by announcing its first-ever dividend of $0.50 per share. For the first quarter of 2024, Meta Platforms expects total revenue of $34.5 billion – $37 billion, more than the Street’s estimate of $33.87 billion.
The FPA Crescent Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) saw a welcome recovery in engagement and revenue year-to-date following a tough 2022. The company has continued to offer new solutions that allow advertisers to target customers effectively and efficiently via one of the world’s leading digital platforms. Moreover, operating profits are rising due to an organization-wide focus on improving productivity and accelerating the time to market for new products. However, overall profitability continues to be weighed down by losses in the Reality Labs segment. But, there is positive optionality that Meta will emerge from the AI arms race as one of the leading players in the industry.”
2. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Ecommerce giant Amazon.com Inc (NASDAQ:AMZN) is a key part of the Bridgeway Blue Chip ETF as well as a ubiquitous member of billionaires’ portfolios.
Amazon.com Inc (NASDAQ:AMZN) recently posted strong fourth quarter results. EPS in the fourth quarter of 2023 was $1.00, much higher than the estimated EPS of $0.80. Revenue in the quarter jumped 13.9% year over year to $170 billion, surpassing estimates by $3.74 billion.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2023 investor letter:
“For the full year, the top relative and absolute contributors were Amazon.com, Inc. (NASDAQ:AMZN), Salesforce, and ServiceNow. Amazon shares appreciated 88% in 2023, driven primarily by rapidly expanding operating profit margins and free cash flow growth. After the pandemic, Amazon experienced a period of inefficiency and overinvestment in its distribution and logistics infrastructure. Amazon is now leveraging these investments as growth returned to its e-commerce business in 2023 after a highly unusual 2022. At the same time, Amazon’s rapidly growing and high-margin advertising business is contributing strongly to the entire company’s operating profit growth. The AWS (Amazon Web Services) cloud infrastructure and services business continued to slow in 2023 as customers anticipating a more difficult economic environment looked to save money on their cloud spend, but these cloud spending optimizations began to stabilize in the second half of 2023. We now expect customer interest in generative AI will begin to contribute to growth.”
1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Investors: 306
Microsoft Corp (NASDAQ:MSFT) is the most popular blue chip stock among the 910 elite hedge funds tracked by Insider Monkey. Last month, Microsoft Corp (NASDAQ:MSFT) posted fiscal second quarter results. GAAP EPS in the period came in at $2.93, beating estimates by $0.16. Revenue in the period jumped 17.7% year over year to $62.02 billion, beating estimates by $890 million.
A total of 206 hedge funds tracked by Insider Monkey had stakes in Microsoft Corp (NASDAQ:MSFT) as of the end of the third quarter of 2023.
Madison Sustainable Equity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:
“Microsoft Corporation’s (NASDAQ:MSFT) sustainable scorecard was updated with an unchanged rating of Above Average. The company’s board has an official Environmental, Social, and Public Policy Committee in addition to the traditional Audit, Compensation, and Governance committees. For ten years, Microsoft has publicly released data measuring the diversity of its workforce. With the prominence of Artificial Intelligence (AI), the company has launched a 5-point blueprint for governing AI to address public policy and regulation. Environmentally, Microsoft has multiple programs to be carbon negative by 2030. The company has signed Purchase Power Agreements for carbon-free energy totaling 13.5 Gigawatts.”
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